Cabot Corporation CBT is set to release first-quarter fiscal 2018 results after the market closes on Feb 6.
Last quarter, the company reported a negative earnings surprise of 2.2%. It reported adjusted earnings of 91 cents per share that missed the Zacks Consensus Estimate of 93 cents.
Net sales increased around 16.8% year over year to $723 million in the quarter, topping the Zacks Consensus Estimate of $686 million.
The company beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing in the other two, with an average positive surprise of 4.3%.
Let’s see how things are shaping up for this announcement.
Cabot Corporation Price and EPS Surprise
Cabot Corporation Price and EPS Surprise | Cabot Corporation Quote
Earnings Whispers
Our proven model shows that Cabot Corp. is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:
Zacks ESP: Earnings ESP for Cabot Corp. for the fiscal first quarter is +3.21%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 81 cents and 78 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cabot Corp. currently carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors to Consider
In November 2017, Cabot Corp. stated that moving forward to fiscal 2018, it remains focused on its growth strategy in core activities, driving application innovation with customers and generating robust cash flows through optimization and efficiency. Cabot Corp. is also optimistic about the current business environment and expects to witness growth across all segments.
The company will also be speeding up its growth investments in the Carrollton and Wuhai projects, which is expected to drive future profitability. Overall, Cabot Corp. will continue to focus on creating shareholder value by generating strong discretionary free cash flow and reinvesting in core business activities along with returning cash to shareholders.
Cabot Corp.’s revenues for the fiscal first quarter is projected to rise 5.4% year over year as the Zacks Consensus Estimate for the quarter is currently pegged at $644 million.
Revenues in the Reinforcement Materials segment increased 27% year over year in the last reported quarter while the EBIT went up 14.3% year over year, mainly supported by an improved demand environment in China and higher volumes and unit margins from calendar year 2017 customer contracts.
Sales for the Performance Chemicals rose almost 15% year over year in the last quarter. EBIT declined 5.2% year over year, mainly due to higher fixed costs and lower unit margins from the impact of higher feedstock costs, which were partly offset by strong volume growth.
Sales of both Purification Solutions and Specialty Fluids declined year over year in the fiscal fourth quarter. While the EBIT of Purification Solutions segment remained mostly flat year over year, results in the quarter benefited from higher volumes in the Specialty applications along with the favorable impact from changes in inventory levels. EBIT of the Specialty Fluids segment fell year over year due to decreased project activity in Asia and the North Sea.
In October 2017, Cabot Corp. indefinitely idled three of the seven units at its activated carbon manufacturing facility in Marshall, TX. The move not only enables the company to realign its costs to current demand and pricing levels but also adapt to present market conditions in North America.
Moreover, Cabot Corp. inked a deal in late October last year to purchase one of North America’s leading producers of black masterbatches (also known as concentrates), Tech Blend, for roughly $64 million. The move extends Cabot’s global footprint in black masterbatch and compounds and also allows to grow in conductive formulations.
Cabot Corp.’s shares have moved up 7% over the last three months, outperforming the industry’s 5.4% growth.
Other Stocks Poised to Beat Estimates
Here are some other companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:
Agnico Eagle Mines Limited AEM has an Earnings ESP of +18.99% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinross Gold Corporation KGC has an Earnings ESP of +2.27% and carries a Zacks Rank #3.
FMC Corporation FMC has an Earnings ESP of +1.38% and carries a Zacks Rank #3.
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